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Unique Auto Sales, LLC v. Dunwody Insurance Agency

Court of Appeals of Georgia, First Division

February 19, 2019

UNIQUE AUTO SALES, LLC ET AL.
v.
DUNWODY INSURANCE AGENCY ET AL.

          BARNES, P. J., MCMILLIAN and REESE, JJ.

          BARNES, PRESIDING JUDGE.

         Unique Auto Sales, LLC and its owner/operator Justin Campbell appeal the summary judgment entered against them and in favor of Dunwody Insurance Agency and its agent, Thomas McEachern. At issue is whether the insurance parties can be held liable for failure to procure certain insurance coverage for Unique Auto Sales. The trial court answered no to this question. For reasons explained below, we reverse.

         Summary judgment is properly granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law[.]" OCGA § 9-11-56 (c). "In our de novo review of the grant of a motion for summary judgment, we must view the evidence, and all reasonable inferences drawn therefrom, in the light most favorable to the nonmovant." (Citation and punctuation omitted.) Cowart v. Widener, 287 Ga. 622, 624 (1) (a) (697 S.E.2d 779) (2010).

         So viewed, the record shows the following. Unique Auto Sales is a wholesaler of used automobiles. It buys used vehicles from various sources, then shops for business purchasers of those vehicles, then delivers the vehicles - typically, on a "consignment" basis - to those purchasers at their designated locations. With respect to the size of the enterprise, during 2017, Unique Auto Sales was selling as many as 600 vehicles per month. Campbell was operating Unique Auto Sales out of his Georgia residence, but almost none of the business's vehicles were stored at that location.

         For about five years, Unique Auto Sales delivered vehicles to High Line Motors, located in South Carolina and owned by Michael Alexon. During those years, Unique Auto Sales would consign vehicles to the South Carolina enterprise and receive payments after that company executed sales.[1] Then in 2015, the South Carolina company ceased paying Unique Auto Sales for vehicles that had been delivered to its designated South Carolina location. Seven of those vehicles were never recovered, and Unique Auto Sales calculated a loss of approximately $230, 000.

         To recoup its loss, Unique Auto Sales filed a claim with its insurance company, Utica National Insurance Group. The insurance company denied the claim. In a letter to Campbell dated November 18, 2015, Utica National Insurance Group set out certain policy provisions, including an exclusion that the insurance company would not pay for:

"Loss" to any covered 'auto' displayed or stored at any location not shown in Item Three of the Declarations if the 'loss' occurs more than 45 days after your use of the location begins.[2]

         It is undisputed that "Item Three of the Declarations" listed only Campbell's Georgia residence. Hence, as Appellants Unique Auto Sales and Campbell maintain in their joint appellate brief, "Utica issued a policy with an exclusion for autos displayed or stored on premises other than Unique Auto's listed address, which happened to be Campbell's home."[3]

         In this lawsuit, Unique Auto Sales and Campbell (collectively, the "Automobile Plaintiffs") sought to recoup the loss from the insurance agency and its agent who procured the insurance policy - Dunwody Insurance Agency and Thomas McEachern (collectively, "Insurance Defendants"). The Automobile Plaintiffs alleged that the Insurance Defendants knew Unique Auto Sales' business model; that in about 2012, the Insurance Defendants secured an insurance policy for Unique Auto Sales from Utica National Insurance Group; that the policy remained in effect at the time of the claimed loss; that the Insurance Defendants had repeatedly assured the Automobile Plaintiffs that the coverage provided by the policy was appropriate for Unique Auto Sales; that the Automobile Plaintiffs relied on those assurances; that the insurance policy procured by the Insurance Defendants provided Unique Auto Sales with virtually no coverage; and that the Automobile Plaintiffs had consequently suffered a loss of nearly $230, 000. The Automobile Plaintiffs thus sought to recover damages from the Insurance Defendants under theories of negligence and breach of contract.

         During discovery, Campbell recounted that he had procured the policy at issue in 2012, and had renewed coverage through 2016. He admitted that he had read the entirety of neither the initial policy nor any renewal documentation. He asserted, however, that the insurance agency and its agent were experts, and so he relied on the instruction and expertise of McEachern (the insurance agent) who repeatedly assured him that Unique Auto Sales was adequately covered.

         The Insurance Defendants filed a motion for summary judgment, arguing that Campbell was obligated to read the policy, and that had he done so, he would have ascertained that the type of loss claimed here was not covered.

As a general rule, an insurance agent who procures insurance, but fails to obtain all of the requested coverage, is insulated from liability if the insured does not read the policy. This is because an insured has a duty to read and examine an insurance policy to determine whether it provides all of the coverage sought. The general rule, however, has several exceptions, including: [w]hen the agent has held himself out as an expert and the insured has reasonably relied on the agent's expertise to identify and procure the correct amount or type of insurance, unless an examination of the policy would have made it readily apparent that the coverage requested was not issued.

(Citations and punctuation omitted; emphasis supplied.) Cottingham & Butler, Inc. v. Belu, 332 Ga.App. 684, 686-687 ...


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